Woodruff Sawyer
MONTH-IN-BRIEF (Jun 2025)
RWI Insurer Exercises Rarely Used Right of Subrogation
By Yelena Dunaevsky, Woodruff Sawyer
Per Geoffrey Fehling’s recent LinkedIn post, an interesting complaint was filed on June 11, 2025, in Delaware Chancery Court. Liberty Surplus Insurance Corporation (“Liberty”) brought the complaint against Owner Resource Group, et. al. and its former CEO, CFO, and director of finance (“Sellers”) in an attempt to exercise Liberty’s right of subrogation. The complaint relates to a transaction where Liberty served as the representations and warranties insurance (“RWI”) carrier and paid a $12.2 million claim pursuant to an RWI policy after the purchaser in the transaction discovered that the seller had engaged in fraudulent activities. While RWI policies typically cover seller fraud, they also reserve a right for the insurer to subrogate against the seller if fraud occurs. Insurance carriers very rarely exercise this right because (1) fraud is very difficult to prove and (2) carriers do not want to earn a reputation of being tough on the sellers. However, in this case, the facts must have been such that Liberty could not avoid subrogating.
